Peso Poor, Dollar Rich: Who Wins Without the Cepo?
Who actually benefits from Argentina’s removal of exchange rate restrictions (a.k.a. “cepo cambiario”)?
When Argentina lifted its capital controls in April 2025, it was hailed as a benefit to the nation: a golden era for the economy. While investors cheered and the headlines sounded optimistic, a question lingered beneath the surface: Who benefits?
Dollars in Argentina
The cepo (“clamp”) limited access to US dollars, capping monthly purchases at $200 per person with a 30% purchase tax. It was designed to preserve reserves and prevent capital flight, but at the cost of distorting markets and creating a gap between official and black-market exchange rates. While almost three quarters of Argentinians live in or close to poverty and many Argentinians borrow money to pay for groceries, it is questionable whether many people ever had the luxury of saving anything, whether in pesos or dollars.
Argentinians hold a surprising $277 billion abroad. Deposits in domestic banks are only $32.5 billion. Guess who owns it?
When a temporary tax amnesty was declared by Javier Milei’s government, foreign assets of $18 billion were declared by 280,000 individuals. That amounts to more than $64,000 per person, clearly not typical wage earners. The people who benefited from lifting the $200 per person per month cap were therefore the rich: wealthy households, exporters, multinational companies, and foreign investors who can now move capital freely. For the wealthy, lifting capital controls is liberation: no more forced conversions, dual rates, or delays. They can dollarize freely, shield assets, and plan investments. Only five percent are considered upper class. It is they who own most of the dollars abroad, primarily via foreign assets, export-linked revenue, or capital income. That leaves 95% with few or no savings, as years of inflation made that infeasible or downright impossible.
For the average José, the dollar surged, the peso slipped, and inflation picked up again, with the government promising inflation will be a thing of the past by mid-2026. In the meantime, life got harder, because prices react to a floating dollar, but incomes do not: rent, medicine, food all went up. That was expected, but what was not clear to everyone was that very few citizens would stand to benefit at all.
A household of four must earn more than AR$1.1 million (approx. $940) per month to not be considered poor. Rents for two-bedroom apartments in most large cities are more than AR$400,000. That leaves very little for essentials.
Many households cannot manage to earn more than a million pesos each month. For instance, a secondary-school teacher makes at least AR$635,000 per month and a part-time psychologist only AR$450,000. With two children, they are therefore below the government’s official poverty line for households. An Uber driver receives about the same as a full-time teacher in Argentina. Bus drivers and car mechanics each make around AR$1.2 million per month, so more than a teacher and part-time psychologist together or a full-time tenured university professor. This is not to say that the bus driver and the car mechanic are overpaid; it is everyone with university degrees who is paid way too little. A bus driver should not live in poverty. But neither should a teacher, professor, psychologist, nurse, hair stylist, or anyone else with a full-time job.
Trickle-down economics
Supporters of lifting the cepo argue that it is a necessary condition for long-term economic growth through foreign investment and exports from local firms. In theory, that is correct: it could stimulate job creation and raise productivity. But it hinges upon two assumptions:
- The capital will be reinvested domestically and not hoarded as it appears to be today.
- Growth will be inclusive, which it rarely is.
Argentina has historically seen capital flight rather than reinvestment, and past liberalizations have failed to lift income levels. Without policies that ensure gains are redistributed through wages, public services or progressive taxation, growth may come, but its benefits will remain concentrated near the apex of the social pyramid. Such redistributive measures are extremely unlikely with a libertarian/anarcho-capitalist president anyway who is increasingly out of touch with the population at large.
The idea that the benefits will “trickle down” is a fallacy: tax cuts and liberalization increase inequality without raising growth, as researchers from the LSE found in a cross-country analysis. Capital liberalization mostly benefits capital-intensive sectors, such as agriculture, mining, and finance. Wealth from such liberalization does not tend to spread to labour-intensive sectors.
A policy for the few
Ending capital controls makes sense from a financial orthodoxy standpoint. But its benefits are not evenly distributed. The government has mostly looked at macroeconomic benefits: investor trust, IMF support, and long-term growth. But it has ignored the short-term fallout, such as a surge in supermarket prices that Argentinians feel every day.
Those who already had dollars now have more freedom. Those who live in pesos face greater vulnerability.